JSW Steel charts three-phase turnaround plan for Monnet Ispat

JSW Steel, along with Aion Investments, had acquired Monnet in September

JSW Steel has made an elaborate, three-phase turnaround plan for Monnet Ispat, the distressed steelmaker that was referred to insolvency courts last year for defaulting on loan repayments.

The plan includes restarting many of the units at Monnet's facility in Raigarh, Chhattisgarh; utilise its capacity of 1.5 million tons, and eventually look at expanding the facility.

JSW Steel plans to commission the closed units by December, said Seshagiri Rao, Joint Managing Director and Group CFO of JSW Steel.

"If you see the strategy of JSW Steel right from beginning in acquiring the stressed assets, is that to keep the stressed asset in an SPV until turnaround happens, after that only we would like to bring it into the fold of JSW Steel. So in the case of Monnet Ispat, we followed same policy..." said Rao.

The Sajjan Jindal-company, along with Aion Investments, had acquired Monnet Ispat in September after the end of the insolvency proceedings. The combine was the only bidder for Monnet and paid Rs 2,875 crore. Monnet owed banks Rs 11,000 crore.

While Monnet is EBITDA positive, Rao underlined that it is not "sufficient to cover interest and depreciation."

The plan thus is to revive the unit and generate cash. At present, only the DRI plant is functional. DRI, or direct reduced iron, is a steelmaking process where iron ore pellets or fines are processed using gas to make steel.

"We would like to commission billet plant, sinter plant, blast furnace, caster and TMT, bar mill. These are units we would like to commission. That is phase 1," said Rao. Once these units are operational, the facility will generate cash.

In the second phase, JSW Steel wants to bring the facility to its full capacity of 1.5 million tons. In the third phase, the plan is to explore the possibility of expanding the capacity beyond 1.5 million tons.

"These are three phases we are working for turning around Monnet. So our effort in the Q2, Q3 that is October to December is to commission these units, which were operational earlier that is how we are working on Monnet," said Rao.

Speaking to journalists after the company's AGM in July, Sajjan Jindal, Chairman and Managing Director of JSW Steel, had said the company plans to turnaround Monnet within a year.

JSW Steel had followed a similar plan to turnaround Ispat Industries, the Vinod Mittal-company that was sold in 2010. After the turnaround, Ispat was merged with JSW Steel.